After David Cunliffe bizarrely compared himself to Helen Clark and Norman Kirk we are going to see a demonisation of David Cunliffe much like the attacks on Kevin Rudd by pro-Gillard forces in Australia like Stephen Conroy, Stephen Smith and Wayne Swan.

We have already seen this with the Ilam candidate, James Dann, damning Cunliffe in an open letter.

It will be systematic, and it will be nasty. His reputation will be trashed by his own team, making him completely unacceptable for the membership to foist him upon the caucus. The caucus knows that they can’t command the membership, but they can make Cunliffe so unpalatable that the unions will act.

The problem is caucus too is highly factionalised. Clayton Cosgrove has been acting the bully-boy strong arming other candidates to stand aside and promote Grant Robertson. The problem is Clayton Cosgrove is so thoroughly discredited after running a candidate campaign in Waimakiriri, one that failed and also delivered up an appalling party vote result. He is despised as a result, even by those on the right of the Labour caucus. But caucus has to block vote now to send a message to the membership that they cannot countenance a dud leader like David Cunliffe. They need to effectively veto Cunliffe but that won’t work.

It won’t work because the membership is feral left. That membership believes that David Cunliffe is a martyr and that he was set up to fail by the caucus…a caucus of centrist traitors to the socialist cause. The only thing that unites caucus right now is their mutual loathing of David Cunliffe.

The hard left of the party, stocked now with old Alliance war-horses, are more interested in being pure rather than being in power. They are septic that their mates like Carol Beaumont got rinsed and are on the outside. Beaumont is so thoroughly disliked that when asked to provide her with a job, Helen Kelly refused out-right. Of course it is the same hard-left that was pulling strings inside Labour for them to tank Kelvin Davis in Te Tai Tokerau. They loathe candidates like him and Stuart Nash. They believe in a puritanical socialism, where people like Nash and Davis are actually closet tories and should actually be run from the party rather than emulated for their electoral success. Read more »

THE Kiwis may consistently flog Australia in rugby, but if welfare and whingeing were a competi­tion we would be the undisputed champion.

Even after Joe Hockey’s tough budget, Australia’s welfare mountain will still dwarf anything across the Tasman.

The culmination of almost two decades of mainly populist budgets, the Abbott government will spend $6200 a person on cash welfare next year, over 25 per cent more than New Zealand’s government will on each of its citizens (converting all amounts to Australian dollars).

Education spending, at $2900 a person, is 10 per cent more generous in Australia but health expenditure is torrential by comparison: Australian state and federal governments will lavish more than $4600 a person to keep Australians alive and healthy, almost 50 per cent more than is spent in New Zealand. No methodological quibble could bridge such stark differences.

The relative splurge extends to hiring, too. Australia’s population of 23.5 million is about 5.2 times New Zealand’s, but as of June last year we had 8.4 times as many public servants: 1.89 million across our state, federal and local governments compared with New Zealand’s 226,000.

If the federal government overnight reduced welfare, health and education spending to New Zealand levels it would be rolling in a $40 billion budget surplus next year rather than wallowing in deficit until 2018 or even later.

Australians’ hysterical reaction to the Coalition’s first budget must bemuse New Zealanders, especially since Treasurer Bill English said last week that he would cut public spending as a share of gross domestic product by more than twice as much as the Abbott government has announced.

In fact, without a minerals boom to line government coffers and despite a huge repair bill from two devastating earthquakes, New Zealand’s budget will be back in surplus by $NZ400 million ($370m) next financial year, rising to $NZ3.5bn by 2018.

English, now in his sixth year as New Zealand’s Treasurer, commendably chose not to emulate the world’s greatest treasurer Wayne Swan and kept a tight leash on public spending before and after the global financial crisis, preferring to cut income taxes and lift consumption tax. The Key government, facing election again later this year, is now reaping the rewards.

Kevin Rudd has been re-elected leader of the Labor Party almost three years to the day since he was deposed by Julia Gillard.

Mr Rudd won the ballot 57 votes to 45. There was no spill for position of deputy leader however there are reports that Treasurer Wayne Swan has resigned.

Labor is in disarray. The caucus is deeply divided. Most of their money men have been indicted for corruption, the power brokers too, the ones left are quaking in their boots that other skeletons won;t come out, but in all likelihood they will.

Labor is stuffed for at least 3 probably 4 terms nationwide. The effects could well last for a generation. Read more »

KEVIN Rudd’s resurrection as Prime Minister would lift the Labor Party back into a 50-50 fighting chance against Tony Abbott at the election.

But voters have urged Julia Gillard not to hand the job to him on a platter – rejecting Labor MPs’ calls for her to resign to make way for Mr Rudd.

An exclusive Galaxy poll for The Sunday Telegraph has revealed Mr Rudd would deliver a six-point lift in the Labor Party’s primary vote, saving up to 18 seats in NSW, Queensland, WA, Victoria and the Northern Territory including Treasurer Wayne Swan’s Brisbane electorate of Lilley. Read more »

Deputy Prime Minister Wayne Swan looks set to lose his Brisbane seat of Lilley, with internal polling suggesting Labor will struggle to retain any Queensland seats at the September 14 federal election.

In a result even worse than the 1996 ”baseball bats” election, when Labor was reduced to two of the then 26 seats in Queensland, Labor may retain only one MP – former prime minister Kevin Rudd.

The Queensland polling, taken in recent weeks in Mr Swan’s seat of Lilley, is believed to show Mr Swan’s primary vote has collapsed to just 28 per cent, compared with 41 per cent at the last election.

Mr Swan has held the seat since 1998, although at the last election his margin narrowed from 8 per cent to 3.2 per cent, with a 10 per cent fall in his primary vote.

Like all established media, the Financial Review has to cut costs. The Sydney subs desk, traditionally part of the fabric of the newsroom, has been shut and articles such as this are now subbed by a Fairfax Media team in Auckland.

While still getting up to speed, the Kiwi team is well drilled, eager and costs a lot less than if hired under Australian pay rates and dollar. Such supply chain changes are happening across the Tasman also with call centres and information technology, driven by 40 per cent or so cost differences.

The flip side of Australia’s high cost base is its relative prosperity. Over the past two centuries, Aussies have rarely been this much more prosperous than Kiwis, thanks to the mother of all resources booms in Western Australia and Queensland.

Yet a side trip to Wellington confirmed that this trans-Tasman disparity has likely peaked. Australia’s resources boom luck is ending and we’re about to pay for its mismanagement. While New Zealand’s bad luck is about to turn for the better, it also will reap the benefits of its more disciplined policy-making.

Australia enjoyed a minerals boom, we endure the Green party spiking any such development.

New Zealand didn’t have a mining boom to shield it from a global financial crisis recession. The February 2011, the Christchurch earthquake flattened much of the country’s second biggest city. Then came a drought. Elected in late 2008 at the start of this bad luck, John Key’s National government also had to deal with the legacy of nearly a decade of a back-sliding and big spending Labour government.

Key and Finance Minister Bill English let the budget cushion the early bad luck. The deficit blew out to more than 9 per cent of gross domestic product.

The government faced a dreadful set of circumstances when they took office.

Yet, while Wayne Swan’s sixth budget left Australia exiting its mining boom with a fiscal mess, English’s fifth budget a few days later confirmed that New Zealand will be back in surplus in a couple of years. Based on spending restraint, there’s been none of Swan’s shameless accounting trickery. And English has delivered genuine tax reform: a 15 per cent GST, a 33 per cent top marginal income tax rate and a 28 per cent corporate rate.

New Zealand is now likely to grow just as fast as Australia over the next few years. While Australia faces an income crunch, the NZ Treasury forecasts that Kiwi household incomes will rise nearly 20 per cent over the next four years.

What also immediately stands out is Wellington’s grown-up and stable government, even a minority one enforced by New Zealand’s proportional electoral system. There is none of the political madness, dysfunction and class warfare rhetoric that has come from Rudd-Gillard Labor over the past six years.

A former investment banker and a former South Island farmer, respectively, Key and English are more substantial and less tribal than Julia Gillard and Swan. They stress business-friendly growth and dismiss the idea that more government spending means better public services.

It is a model that Tony Abbott, himself the husband of a New Zealander, would be advised to follow. English draws a clear distinction between the crash-through New Zealand reform era of Labour finance minister Roger Douglas and National successor Ruth Richardson. That was followed by nearly two decades of policy drift and retreat under governments of both stripes. Now it’s all about incremental but continual policy reform that cannot so easily be later undone.

Politically, it’s working. Halfway through their second term, the polls give Key’s Nationals 49.1 per cent of the vote, compared to 43.1 per cent for Labour and the Greens. Fifty nine per cent of New Zealanders think the country is heading in the right direction.

It sounds like the Aussies are a wee bit jealous of the state of our economy.

And now the luck. While Australia’s mining boom has been based on China’s infrastructure spurt, New Zealand is at the start of a massive dairy boom driven by middle class Chinese demand for protein. New Zealand excels at turning water into powdered milk protein. Australia’s terms of trade are now sliding from 140-year highs. But, as New Zealand’s terms of trade rise, it faces a challenge well known this side of the ditch: a strengthening exchange rate.

He embarrassed Hockey over his recent weight loss, due to stomach stapling surgery, and said he hoped the doctors hadn’t taken his spine out during the operation.

There were plenty more sledges of Joe Hockey, who is likely to be Australia’s next Treasurer.

It began happily enough. Jones announced Hockey as ”the next treasurer of Australia”.

Jones did annotate this introduction with “the one left with the mess”, but still, any anointment from Jones is not to be lightly dismissed.

This is the man Hockey once called “the greatest broadcaster of all time”. Furthermore, it was the day after Treasurer Wayne Swan had brought down his sixth budget, and his sixth deficit. Barring an apocalyptic science fiction-esque event that results in a giant lizard demolishing Parliament House in a single swipe of its reptilian tail, it will also be Swan’s final budget. Read more »

New Zealand was on the brink of recession prior to the Conservative government of John Key taking the reins in 2008. This small economy of 4.4 million people is now preparing for a series of record surpluses… and without the help of a mining industry.

Helen Clarke’s [sic] Labour Government left the country facing severe recession with a bloated Public Service sector and disastrous losses due to her takeover of the NZ rail system.

Abbott could do worse than take a look across the Tasman when attempting to repair the damage left by the union government of Julia Gillard and the incompetency of Kevin Rudd.

Are unions really the problem? They seem to be in Australia, having never really really dealt with them like we did in the 90s. Read more »

Australia faces a decade of budget deficits with the annual total set to pass $60 billion in 2023 unless governments take tough action to “share the pain”, an expert panel has warned.

The Grattan Institute’s assessment comes as Treasurer Wayne Swan confirms the budget has taken a $7.5 billion hit since the midyear update in October.

He told the ABC from Washington: “We have seen the terms of trade come down but the dollar didn’t move. That’s caused a hit, if you like a sledgehammer, to revenues in the budget since the midyear update of something like $7.5 billion. And of course the impact won’t just be in this financial year. It will also be across the forward estimates.”

The institute says that while notionally on track to surplus now, the combined state and federal budget deficits should reach 4 per cent of gross domestic product by 2023, which is about $60 billion in today’s dollars and would be about $100 billion in 10 years’ time.

Labour’s circular firing squad reveals many things about the state of that party. Firstly it reveals a lack of character on the part of its leader, a man incapable of leading by example, by stature, or by design. Secondly it reveals a lack of cohesion between the caucus and its wider constituent bodies. Thirdly it reveals the jealousies that exist at all levels of the party.

Shearer’s ritual dismissal of Cunliffe is not a new strategy. Shearer and his lieutenants Trevor Mallard and David Parker have taken a leaf out of Julia Gillard’s book. When faced with destabilisation from Kevin Rudd, Gillard wheeled out her caucus surrogates to denounce Rudd as a demagogue unfit to lead his party or his country. Whereas Gillard had Wayne Swan, Simon Crean and Nicola Roxon, Shearer had Hipkins and Faafoi front the media to denounce Cunliffe as a destabilising force within the caucus.

Next Shearer demanded endorsement at the point of a gun, no debate, no dissent. Having achieved ‘unanimous’ endorsement from his colleague, Shearer then dismissed Cunliffe to the back bench. In effect Cunliffe is now the excuse for low opinion polls, a man who is to serve as toilet paper for Shearer’s failed leadership, languishing at the bottom of the Labour Party’s political long-drop.

The problem with this scenario however is Cunliffe alone is not to blame. Labour has yet to move to a level of political support it realised when it lost office in 2008. This is extraordinary. Students of history will know Bill Rowling lost the 1975 election, but outpolled Robert Muldoon in 1978. Mike Moore led Labour to a landslide defeat in 1990, but he came within one seat of winning in 1993.

Shearer leads a party approaching its fifth year in opposition and he shows no sign of leading a recovery. Relying of a coalition of friends based on Russel Norman and Hone Harawira is a declaration of defeat, the conclusion of a failure of leadership that he Shearer’s responsibility and Shearer’s alone.

The leader of the Labour Party is incompetent, mangles his words, struggles with basic policy concepts, and has little or no feel for human behaviour. How does he expect his diminishing band of party members to raise money and knock on doors when he has just thrown their preferred candidate for leader under the wheel of a bus?

And Shearer need not think his so-called KiwiBuild policy will make a blind bit of difference. Communism-meets-lotto housing based on cheap homes situated on cheap land around train stations is hardly going to motivated 200,000 mortgage-paying voters to switch their party vote from National to Labour.

Cunliffe is no better off today than he was last week. Yes he has been demoted off the front bench, but in a caucus of 34 led by David Shearer, it was never likely that Cunliffe was going to feature in a government any time soon. Once Shearer accommodates Norman, Turei, Harawira, Sue Bradford, and a mandatory quota of feminist unionists and others from the Rainbow sector, what role would a white heterosexual male possibly have in a future Labour-led government?

However Cunliffe alone deserves the odium that he is coping. A weak-kneed to Shearer’s ultimatum is a disappointing end. Yes, Cunliffe should not have hedged at the weekend conference; the smart thing would have been to publicly endorse Shearer there and then. But having been called on to front up, Cunliffe should have done just that and tested the resolve of the Labour caucus. Having lost, he could have then resigned and moved to the back bench rather than being dumped by a political featherweight.

Cunliffe has been unwise to rely upon the likes of Charles Chauvel, Moana Mackey and Louisa Wall. None of his core supporters represent the aspirations of mortgageville New Zealand, and none of them were likely to have the fortitude to go through the fire on behalf of their candidate.

Cunliffe is a vain and flawed man, and someone who is deserves to be disliked by his colleagues. But Shearer is ten times worse, a leader who seeks strategic direction from Trevor Mallard.

Well might Labour members throw up their hands in horror. As John Key rightly points out, how can they run the country if they can’t even run a conference?

The correct response now is for Labour’s rank and file to force all MPs to face selection contests. A contest of ideas is the only way to force its caucus to align with the party that carries it.